Why Google is Winning the Smartphone Wars

I've argued before that Apple is good at producing great user interfaces thanks to its top-down, designer-centric product development process. But that approach becomes a liability for building scalable network services. For those kinds of tasks, Google's bottom-up, engineer-driven organizational structure works better.

A good way to visualize this is by thinking of a computing platform as a funnel. At the narrow end of the funnel is a human user with an extremely limited capacity for absorbing information. At the fat end of the funnel is "the world"—the collection of websites, devices, people, organizations, or other entities with which the user might wish to exchange information. The job of a computing platform is to connect the two—to filter and organize the vast amounts of information at the fat end of the funnel into a form that is digestible by the user at the skinny end.

Google and Apple like to start from opposite ends of the funnel, and this tendency is reflected in the mobile OSes they've built. Apple starts with the skinny end of the funnel, making the user interface as simple and intuitive as possible. They do this by tightly controlling as much of the technology "stack" as possible. Because iPhone, iOS, the iTunes Store, Mac OS X, and iCloud are all made by the same company, they offer unparalleled polish and effortless interoperability.

Google, in contrast, focuses on the wide end of the funnel. The company has focused on making Android work gracefully with as much of the "real world" as possible. When Apple was building its own hardware, Google was cutting deals with numerous hardware manufacturers. While Apple was negotiating an exclusive deal with AT&T that gave Cupertino control over the user experience, Google offered liberal licensing terms in an effort to get all wireless carriers on board. Google is not only has more liberal app store rules, it also allows third parties to develop app stores of their own. As Eric Schmidtput it last year: "If they say no, we say yes."

This approach has real disadvantages. As I written before, the Android user experience isn't as good as the iPhone experience. Google's version of Android is less polished than iOS, and the problem is exacerbated by the fact that Google has allowed its partners to customize the versions of Android they sell, which tends to make it worse. Similarly, the wide variety of hardware configurations makes it more complicated to develop software for the platform, since developers can't make as many assumptions about what features the hardware will support.

Put more abstractly, Google's focus on the fat end of the funnel means that the narrow end—the user experience—suffers. The price of interoperating with a wide variety of third parties is that Android is sometimes forced to present its users with features that feel "half baked." Many of the features that "just work" on the iPhone, like music syncing and mail client configuration, require babysitting by Android users.

Apple has the opposite problem. In its quest to avoid ever subjecting an iPhone user to features that feel half baked, Apple insists on maintaining control over the entire technology stack. That produces simple, intuitive user interfaces, but it makes it harder to interoperate with third parties who may not be willing to cede control to Apple. In other words, Apple's obsessive focus on the narrow end of the funnel limits how wide the wide end of the funnel can be.

This explains why iOS has been losing ground to Android even though most people agree that the iPhone is the best single smartphone on the market. There are tens of millions of people who care most about the narrow end of the funnel. They want the best user interface, and are willing to make compromises on other fronts to get it. Most of these customers will opt for an iPhone. But there are hundreds of millions of customers who care more about some other factor. They want a phone from their favorite carrier, a phone with a physical keyboard or a removable battery, a phone with their choice of app store, a phone they can get for free with a contract, a phone they can get with a pre-paid plan, etc. No single phone (wireless carrier, hardware manufacturer, etc) can satisfy all of these diverse customers. Only a platform designed to support many different phones from many different manufacturers on many different networks can cope with this kind of diversity.

And things will only get more challenging for Apple as the smartphone market globalizes. The overwhelming majority of potential smartphone customers are outside of the United States. Android's relatively liberal licensing model will make it much easier for overseas partners to customize Google's software to the needs of local markets, while Apple's "my way or the highway" licensing model rubs potential partners the wrong way. This is especially true in Asia, which has the majority of the world's population, and where lower average incomes make consumers price-sensitive. As the smartphone market gets more complex, Google's focus on the wide end of the funnel will give it a systematic advantage.